HealthCentral, a Harrisburg, Pa.-based HMO owned by several hospitals, will pay $490,000 to settle alleged violations of insurance department regulations.
The fine-the largest for an insurance department violation in state history-covers various allegations, including the failure to pay promptly on clean claims.
Hospitals hailed that state law, which took effect Jan. 1, 1999, as a major legislative victory.
"We regret the operational and system inefficiencies that hindered our compliance," Robert Dondes, HealthCentral's president and chief executive officer, said in a written statement. The plan has already corrected all the problems the state identified, according to the statement.
The 80,000-member HMO posted a $6 million loss on premiums of $125 million in 1999. Licensed in 1996, the plan is owned by a group of six Pennsylvania hospitals and health systems. They are Ephrata (Pa.) Community Hospital; Lancaster (Pa.) Health Alliance; PinnacleHealth System, Harrisburg; Reading (Pa.) Hospital and Medical Center; Summit Health, Chambersburg; and York (Pa.) Health System.
Pennsylvania hospitals lobbied hard for the prompt-pay law because tardy payments were hurting their cash flow, they said.
Another provider-owned HMO, Penn State Geisinger Health Plan, Harrisburg, Pa., was the first in the state to be fined for failure to pay claims on time, agreeing to pay $150,000 to settle alleged violations of insurance rules last October (Oct. 25, 1999, p. 14).